E-book Company Kobo Bought By Japanese Company Rakuten For $315-Million

Kobo, a Toronto technology company which was a one-time subsidiary of Indigo, Canada's largest bookseller, is known for its e-reader, e-book store and reading apps.

Heather Reisman, CEO of Indigo, remains a shareholder in the company. She is an editor-at-large with The Huffington Post Canada.

Reisman revealed that the company stands to gain about $140 million from the deal, she said at a press conference on Tuesday afternoon.

Kobo will retain its Toronto offices and management.

Rakuten, the company's Japanese purchaser, is one of the world's top e-commerce retailers with subsidiaries in the U.S., Germany, Brazil and much of Asia.

"It's becoming obvious that combining content and e-commerce is critical," said Hiroshi Mikitani, Chairman and CEO of Rakuten at the press conference.

"Rakuten offers Kobo unparalleled opportunities to extend its reach through some of the world's largest regional e-commerce companies," he said in an earlier statement.

"From a business and cultural perspective this is a perfect match," commented Kobo CEO Michael Serbinis.

"This transaction will greatly strengthen our position in our current markets and allow us to diversify quickly into other countries and e-commerce categories," Serbinis added.

Kobo has struggled to compete with larger companies such as Amazon and Apple in the U.S., with Serbinis saying that the Kobo platform only had single or low double-digits marketshare in e-books in the U.S. But he did point out that the company is rapidly expanding in the U.K. and Europe, regions where the e-book market is less mature.

Reisman also said that the recent struggles of U.S. bookseller and Kobo partner Borders had nothing to do with the sale.

"Kobo was not for sale but [Rakuten CEO Mikitani] approached Mike knowing what Kobo had been doing," said Reisman.

"Rakuten sees the value of the Kobo platform and the value of its team that in 24 months had created incredible value for its shareholders," said Serbinis.

The company competes with a number of tech giants in the rapidly growing e-book market including Amazon, with its Kindle reader and Barnes & Noble with the Nook. Apple's iPad and iTunes store is also a key player in the market.

Serbinis said that Kobo would not be retreating from the U.S. market. "It's absolutely important. It's fundamental. We're selling our e-readers through Best Buy, Walmart, through our site," Serbinis said.

Kobo recently released the Kobo Vox, a full-colour e-reader to compete with Amazon's Kindle Fire and the Nook Color.